Video summary

How To Actually Make Money From IPOs in 2026 | Kushal Lodha #374

Main summary

Key takeaways

Finance

Finance-focused summary (IPOs, strategy, macro, and risk)

Core claims about IPO investing (vs “buy & hold”)

  • The host argues that classic buy-and-hold for IPOs is unreliable: from 2000–2023, about 30–35% of years would have been loss-making under an “IPO buy-and-hold” approach.
  • Instead, the recommended approach is to apply at IPO allotment, then trade/exit using a “listing strategy” and a profit-churn mindset—i.e., not treating IPOs like long-term compounding bets.

How to increase IPO allotment (application mechanics & cautions)

Application categories and how “oversubscription” affects allotment probability

IPO applications are split into:

  • Retail
  • SME / Small HNI
  • Big HNI

Oversubscription logic discussed:

  • When oversubscribed, your effective considered amount is capped by the category lot/threshold.
  • If you apply in an oversubscribed category, extra amounts beyond the qualifying threshold won’t improve allotment odds—only the threshold lot-equivalent effectively counts.

Lot-sizing / probability hierarchy (as stated)

As per the host’s hierarchy:

  • Big HNI: “highest probability of allotment”
  • Retail: “second chances”
  • Small HNI: “lowest probability”

Rough heuristics mentioned (presented as rule-of-thumb, not rigorous statistics):

  • Retail ~10x oversubscription → about 1 in 10
  • Small HNI ~40x → about 1 in 40
  • Big HNI ~5x (host’s framework: divide by 5 due to application size/cost mismatch) → about 1 in 10 relative advantage

Note: These are heuristics/rough ideas, not precisely defined statistical estimates.

Major “do not do” (multiple names / multiple demat / mapping rules)

The host warns that applying with multiple names / multiple lots is often ineffective or rejected due to regulatory mapping:

  • PAN-based mapping: “One PAN → one application” treated as compulsory.
  • Multiple applications using the same person identity can be rejected.
  • UPI/bank mapping: using funds from the “same bank account” across linked accounts may break mapping requirements.

Positive framing (with strict caution):

  • If using multiple demat accounts, it should be properly structured under separate identities (e.g., spouse/children).
  • However, the speaker emphasizes: don’t cheat with multiple names under one identity, because allotment requests can be cancelled/rejected.

Cost-based application planning (practical allocation example)

A staged approach depending on capital size:

  • If capital is > ₹10 lakh: apply in Big HNI for one name.
  • Then deploy the remainder into Retail (host claims Small HNI is generally worse probabilistically).
  • If capital is ₹5 lakh: apply Retail first, then move remaining to the next best category (the walkthrough includes spreading across multiple names using ₹15,000 retail lots).

Post-allotment trading strategy (Main Board IPOs): “Rule of 15” (updated for 2026)

Goal

  • Book profit quickly rather than hold long-term.

“Rule of 15” (Main Board) — framework described

After allotment in a Main Board IPO, the approach is:

  • If the IPO typically shows ~10–15% listing gain (“average IPO”):
    • Sell in pre-open before the market opens (sell quickly rather than waiting).
  • For stronger/other cases, the host discusses a 15-minute stop/exit concept:
    • Monitor price action in the first 15 minutes after listing.
    • Set a stop loss tied to the lowest price during the first 15 minutes (or trailing equivalent logic as described).
    • If price drops below that stop level: exit fully.

Updated nuance for 2026

  • Instead of exiting immediately after the first-day window in some scenarios:
    • The exit is pushed out to the close of the 2nd day
    • The rationale is to reduce exposure to circuit-driven issues where the 3rd day might open down sharply.

Profit definition clarification (risk control)

  • “In-books profit”: paper gains that can vanish on reversal.
  • “Book profit”: realized gains taken off the table.

Explicit caution

The speaker repeatedly warns not to treat IPO trading as long-term investing. IPOs are framed as “churning” returns.

SME IPO strategy: “Rule of Five” (exits, not long holds)

Why SME IPOs are riskier (liquidity)

  • Lower liquidity due to fewer shareholders and lot-size constraints:
    • Shares may be tradeable lot-wise, making exit harder (the host notes you may need to sell via larger “baskets/lot blocks”).

“Rule of Five” for SME IPOs — described steps

  • If the IPO is strong/good, it may hit upper circuit (5% circuit logic implied).
  • Holding/exit plan:
    • Do not sell immediately on day 1 even if upper circuit hits.
    • On day 3, check whether price is above Average Traded Price (ATP):
      • Above ATP → hold
      • Below ATP → exit (book profits / stop-loss behavior)
  • Stop-loss guidance:
    • Place a stop loss around ~10% below (tied to expected behavior/circuit dynamics).

Updated nuance for 2026

  • The host says they changed personal behavior:
    • In 2026, they consider booking on the 5th day in many cases.
  • For new investors, they suggest booking earlier (e.g., 1st/2nd day) to reduce reversal risk.

IPO selection checklist (fundamental “lite” + red flags + deal-flow indicators)

Basic points for IPO screening

The host focuses more on deal quality and red flags than deep traditional valuation for IPOs:

  1. GMP (Grey Market Premium)

    • Rough filter: GMP above ~25%

  2. Anchor book quality

    • Use a tool + ask AI to evaluate:
      • allocation between Indian mutual funds vs international funds
      • whether the anchor book looks “good” vs comparable recent IPOs
    • Rule-of-thumb:
      • Indian mutual funds share: ~55–60%
      • International funds: ~40% remainder

  3. Promoter fraud / legal overhang (red alerts)

    • Check for pending:
      • fraud cases
      • GST case
      • income tax case
      • police complaint against the promoter (pending)
    • If present → skip (framed as major warning signs)

  4. Valuation via PE vs peers

    • Compare the company’s PE multiple vs peer companies of similar size.
    • If PE is lower than peers: framed as more favorable/cheaper

  5. Subscription evidence via QIB

    • Emphasis on QIB participation (qualified institutional buyer interest/figures).
    • Also references retail/overall subscription status (noting timing such as last day).

SME additional screening

  • For SME IPOs:
    • Check lead manager / merchant banker quality
    • Compare how their recent IPOs performed
    • “Good lead manager” implies stronger backing

Example red flags (financial concentration & accounting)

Illustrative “AI red flag” items:

  • 85% of business from top 10 customers → customer concentration risk
  • US exports ~65% → geographic concentration risk
  • Accounting changes / order book timing
    • revenue recognized from a specific month window
    • possible inflated profitability implications
  • PE compression after normalization
    • example: reported PE 12–13, but could rise to 26–27/28 after adjusting profitability

Macro view and performance rotations (US vs India) + commodity/currency narrative

Repeated narrative: crude oil up → rupee down (historical recurrence)

The host claims the current regime resembles earlier periods since 1994:

  • wars / geopolitical tensions
  • crude oil price increases
  • INR depreciation (cited as roughly ~20–25% in past contexts)
  • mentions earlier depreciation waves around eras like:
    • 2008
    • 2020-style reference years
    • 2012–13 ~15% narrative (presented as analogs)

Predictions for 2026–2030 horizon (explicit)

  • US underperformance:
    • expected to underperform over the next 3–4 years and “till 2030”
  • India relative outperformance:
    • expected to reach top quartile performance (described as moving into quarter 1)
  • Currency mean reversion concept:
    • India’s “underperformance of currency” expected to stabilize
    • no precise number given, but mentions INR-related stabilization in a broad zone (e.g., ₹ to $120–130 style expectation)

Index-flow mechanism (MSCI / passive FII behavior)

  • The host discusses how FII index funds follow MSCI weights, enabling country rotations as weights change.
  • Conceptual trade idea mentioned:
    • “short India, long Taiwan” due to index weight shifts (framed conceptually rather than as executed advice)

Gold & silver view (tactical)

  • Gold may do better than silver in the current setup.
  • Watch out for silver when momentum comes; otherwise focus more on gold.
  • Mentions historical drawdowns:
    • gold’s first major fall lasting ~27 years
    • second cycle around ~2000 lasting ~10 years
    • a third cycle referenced
  • Risk management disclaimer:
    • explicitly says to consider an advisor

Instruments / assets / references mentioned

  • IPO / SME IPO / Main Board IPO
  • Stocks, mutual funds, ETFs, bonds, commodities
  • FD (fixed deposits)
  • Gold and silver
  • US markets (broad index implied)
  • MSCI (index/factor reference)
  • Company examples (contextual, not necessarily tickers):
    • Paytm, Zomato, Tata Technologies, SBI Card
  • Platform/broker mention:
    • Groww (Groww app)
  • Mentioned mega-cap tech sources of cited context:
    • Microsoft, Amazon, Google, Meta

Key numbers & timelines explicitly stated

  • Backtest window: 2000–2023
    • 30–35% of years loss-making under buy-and-hold IPO approach (as claimed)
  • FD returns mentioned:
    • ~7–8% current
    • possibly 6–7%
    • potential to reach 10–12% via strategy (speaker claim)
  • Average IPO listing gain:
    • roughly ~10–12–15%
  • Capital thresholds (application categories):
    • Retail: roughly ₹15,000 to ₹2 lakh
    • Small HNI: about ₹2 lakh to <₹10 lakh
    • Big HNI: > ₹10 lakh
  • Application lot example:
    • Retail lot application: ₹15,000
    • Big HNI lot threshold: about ~₹10 lakh
  • Rule timelines:
    • “Rule of 15”:
      • monitors first 15 minutes after listing
      • updated 2026 nuance: exit by close of 2nd day in some scenarios
    • SME “Rule of Five”:
      • check across day 1 → day 3 → day 5 (booking suggestions vary)
  • Date mentioned repeatedly for prediction segment:
    • 22nd July (and inconsistent mention of 2nd July in subtitles)

Disclosures / disclaimers mentioned

  • “Investment in Securities Market Subject to market risk. Read all the related documents carefully before investing.”
  • Host caution:
    • “Any recommendation advice please consult your Advisor”
    • framed sections as informational/educational case study rather than explicit financial advice

Presenters / sources mentioned

  • Kushal Lodha (host)
  • Anant Latha (guest; referenced in subtitles as “Anant Ladda” / “Anant Latha”)
  • Sponsor/source:
    • Groww (Groww app)

Original video